Understanding the Dividend Dynamics of Deere & Co
Deere & Co (DE, Financial) recently announced a dividend of $1.47 per share, payable on 2024-02-08, with the ex-dividend date set for 2023-12-28. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Deere & Co's dividend performance and assess its sustainability.
What Does Deere & Co Do?
Deere & Co is the world's leading manufacturer of agricultural equipment, producing some of the most recognizable machines in the heavy machinery industry. The company is divided into four reportable segments: production and precision agriculture, small agriculture and turf, construction and forestry, and John Deere Capital. Its products are available through an extensive dealer network, which includes over 2,000 dealer locations in North America and approximately 3,700 locations globally. John Deere Capital provides retail financing for machinery to its customers, in addition to wholesale financing for dealers, which increases the likelihood of Deere product sales.
A Glimpse at Deere & Co's Dividend History
Deere & Co has maintained a consistent dividend payment record since 1985, with dividends currently distributed on a quarterly basis. Deere & Co has increased its dividend each year since 1987, earning the prestigious title of a dividend aristocrat, a recognition given to companies that have consistently increased their dividends for at least 36 years. Below is a chart showing the historical trends of Deere & Co's annual Dividends Per Share.
Breaking Down Deere & Co's Dividend Yield and Growth
As of today, Deere & Co currently has a 12-month trailing dividend yield of 1.27% and a 12-month forward dividend yield of 1.48%, suggesting an expectation of increased dividend payments over the next 12 months. Over the past three years, Deere & Co's annual dividend growth rate was 18.40%. Extended to a five-year horizon, this rate decreased to 14.10% per year, and over the past decade, the annual dividends per share growth rate stands at 8.80%. The 5-year yield on cost of Deere & Co stock as of today is approximately 2.46%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-10-31, Deere & Co's dividend payout ratio is 0.15.
Deere & Co's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Deere & Co's profitability 8 out of 10 as of 2023-10-31, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
Deere & Co's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and Deere & Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Deere & Co's revenue has increased by approximately 23.20% per year on average, a rate that outperforms approximately 86.21% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Deere & Co's earnings increased by approximately 60.30% per year on average, a rate that outperforms approximately 85.12% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 37.90%, which outperforms approximately 89.74% of global competitors, further demonstrates its strong growth potential.
Next Steps
In conclusion, Deere & Co's consistent dividend payments, impressive growth rate, sustainable payout ratio, solid profitability, and robust growth metrics position it as a potentially attractive option for income-seeking investors. The company's ability to maintain and grow its dividend over decades, even in challenging economic climates, speaks to its financial strength and commitment to shareholder returns. As the agricultural and construction sectors continue to evolve, Deere & Co's strategic initiatives and market leadership may continue to drive its performance and, by extension, its dividend reliability. For investors looking for dividend-paying stocks with a history of growth and sustainability, Deere & Co warrants consideration. Value investors interested in exploring further can use GuruFocus Premium's High Dividend Yield Screener to discover more high-yield investment opportunities.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
